If Canadian Citizens Decide to Save a Larger Fraction of Their

question 15

Multiple Choice

If Canadian citizens decide to save a larger fraction of their incomes, which of the following best identifies the effects?

• A)The real interest rate decreases, the real exchange rate of the dollar depreciates, and Canadian net capital outflow increases.
• B)The real interest rate decreases, the real exchange rate of the dollar appreciates, and Canadian net capital outflow decreases.
• C)The real interest rate increases, the real exchange rate of the dollar appreciates, and Canadian net capital outflow decreases.
• D)The real interest rate increases, the real exchange rate of the dollar depreciates, and Canadian net capital outflow increases.

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Definitions:

Monetary Contraction

A policy or economic condition where the money supply is reduced, often leading to higher interest rates.

National Industrial Recovery Act

A 1933 U.S. law aimed at boosting economic growth during the Great Depression by reducing unemployment and eliminating cutthroat competition.

Business Cartels

Groups of independent businesses that regulate production, pricing, and marketing by agreement among members to limit competition.

Minimum Wage

Legislation requiring that workers be paid at least the stated minimum hourly rate of pay.